A company purchases equipment for $100,000 with a 5-year life. Under MACRS
A company purchases equipment for $100,000 with a 5-year life. Under MACRS, the Year 1 depreciation is:
A. $20,000
B. $25,000
C. $33,333
D. $40,000
Answer: D
Explanation: MACRS 5-year property uses 20% in Year 1 (20% × $100,000 = $20,000? Wait – correction: 20% for Year 1 is not standard. For 5-year MACRS, Year 1 is 20%? Actually: 5-year MACRS Year 1 = 20% → $20,000. But common trap: MACRS uses 200% declining balance. For $100k, Year 1 = 20% × $100k = $20,000. However, standard 5-year MACRS rates: Year 1 = 20.00%. So A. $20,000 is correct. But note: Some exams use 20% for Year 1. Let's confirm: Yes, 20% for Year 1. So Answer: A.

